Three consecutive months of rising inflation They mark an uninspiring trend that breaks with the desired price moderation that, until before the summer, seemed on track. The National Institute of Statistics (INE) confirmed this Friday the advance CPI data for September, which stood at 3.5%, driven by fuels and electricity. This rate is the one corresponding to last month, that is, prior to the Hamas attack on October 7, which began the new outbreak of the conflict between Israel and Palestine whose consequences are today unpredictable, on a humanitarian level first, but also on the global economy. The managing director of the International Monetary Fund (IMF) summed it up well a few days ago, Kristalina Georgieva, when he said that it is “a new cloud on the not very sunny horizon of the global economy.” Wars are usually inflationary, as was seen with the one in Ukraine. It follows that central banks will prolong their high rate monetary policy.
Regarding prices in Spain, without reaching the levels of the increase from a year ago, there are some notable elements. The main one, the energy prices, because they mark the entire production chain and are transferred to the rest of the products until they reach the final consumer. The decision of oil-producing countries to cut the supply of crude oil increased the price of a barrel of Brenta reference in Europe, and it is not ruled out that it will continue to do so with the increase in demand in the winter months and depending on how the Middle East conflict evolves.
olive oil and sugar
Another element to take into account is the food inflation, which has risen 10% annually, well above the general CPI. He olive oil has become an extreme example of price pressure on citizens’ pockets: today it is 67% more expensive that a year ago. AND sugar has become 40% more expensive compared to 2022. In both cases, poor harvests due to water scarcity point to one of the main causes (which should make us reflect on the close relationship between nature and economy), although the competent authorities would do well to take extreme care. surveillance for avoid possible abuse and situations that are difficult to justify, such as differences in the retail price of more than 50% for the same brand depending on the establishment where it is purchased.
In any case, the fact that food prices continue to rise also calls into question the effectiveness of one of the Government’s decisions to stop inflation, the VAT reduction on basic products. This and other measures (such as discounts on public transport or reductions in electricity taxes) expire on December 31, and the IMF has already urged Spain not to renew them. It will not be an easy decision, because if the aid is withdrawn, citizens will notice the effects of inflation more, but it cannot be maintained for much longer without damaging the deficit and public debt. And Brussels will tighten fiscal rules, which will represent an important challenge for the next Government. All this in a scenario in which, predictably, the European Central Bank will continue to maintain high interest rates as long as inflation is not contained. Something that doesn’t seem close for now.